March 21, 2023

Great Indian Mutiny

Complete IndianNews World

These four cities could see a double-digit drop in home prices: Goldman Sachs

The housing downturn could deepen further this year, according to Goldman Sachs (GS).

Data from the investment bank shows that of the 25 largest metropolitan areas in the United States, four are grappling with oversupply, indicating a bumpy outlook ahead.

While the overall housing stock remains tight, these four cities are seeing more homes for sale now than in January 2020. By the fourth quarter of 2024, the company expects home prices to be down 19% in Austin, 16% in Phoenix, 15% in San Francisco and 12% in Seattle.

Supply increased against demand in the Pacific Coast and Southwest markets

Regionally, the West Coast and Southwest have been hit by oversupply “reflecting local challenges, particularly very weak levels of affordability, pandemic-related distortions and, in some markets, heavy labor concentration in the tech industry,” Goldman noted.

separately , In a report from Redfin (RDFN), Cities like San Francisco, Oakland, and San Jose saw home values ​​drop between 3% and 7% in the second half of 2022.

The reason: Those cities were the most expensive markets in the entire country, which hypothetically means home values ​​have the most room to fall. Other reasons: The pandemic fueled mass population exoduses and tech layoffs.

An aerial view shows homes and apartments in a neighborhood in El Paso, Texas, on December 19, 2022. - Housing starting data on new home construction is expected this week from the Commerce Department while mortgage interest rates and fears of a recession have risen this year.  (Photo by Patrick T Fallon/AFP) (Photo by Patrick T Fallon/AFP via Getty Images)

An aerial view shows homes and apartments in a neighborhood in El Paso, Texas, on December 19, 2022. – Housing starting data on new home construction is expected this week from the Commerce Department while mortgage interest rates and fears of a recession have risen this year. (Photo by Patrick T Fallon/AFP) (Photo by Patrick T Fallon/AFP via Getty Images)

Nationally, the housing outlook appears to be less dire. The bank expects home prices to fall 6.1% in 2023 as mortgage rates are heading towards 6.5%.

See also  Long lines at LaGuardia as travelers try to rebook flights

However, against this backdrop, there is a potential risk that despite new homes under construction entering the market, supply remains tight.

“On the web, this indicates a muted effect from completions on the current housing supply/demand balance and, ultimately, prices,” the bank said. Homes (ratio of inventory to annual sales) will continue to be below historical averages.”

The pipeline of homes under construction is beginning to turn into completed works

The pipeline of homes under construction is beginning to turn into completed works

In January, builders continued to slow home construction. Housing starts fell 4.5% to 1.31 million at an annual rate, down 21.4% from a year ago. said the Commerce Department on Feb. 16.

Other data from the National Association of Realtors Reviews Existing Home Sales slipping, as government data indicates Unexpected high in new home sales.

The bank notes that “a gradual recovery in home sales in the second half of the year should act as an additional buffer” to the supply outlook.

Although the homebuying business has become shaky with the 30 mortgage rate flat, the problem remains an oversupply of multi-family units.

The multifamily share of total home starts over the past six months was the highest since 1984 for single-family, multi-family, and total home starts (SAAR)

The multifamily share of total home starts over the past six months was the highest since 1984 for single-family, multi-family, and total home starts (SAAR)

Over the past six months, about 40% of all housing starts have been for multi-family units, according to Goldman. However, the company noted that most of these units are taking longer to build, which could challenge the medium to long-term outlook for rental properties.

Danny Romero is a reporter at Yahoo Finance. Follow her on Twitter @employee

Read the latest financial and business news from Yahoo Finance

See also  Amazon shut down solar rooftops last year after fires and explosions

Download the Yahoo Finance app for apple or android

Follow Yahoo Finance on Twitter TwitterAnd FacebookAnd InstagramAnd FlipboardAnd linkedinAnd Youtube